There is debate as to whether the FreeZFS license (CDDL) is compatible with the GPL, which is why FreeZFS is not part of the Linux Kernel. Some distros are baking it in, but there has long been concern about if merging it violates the license or not.

They took the entire Solaris code back to proprietary source and kept improving ZFS themselves. For instance, they added encryption.

Even if Oracle evaporated and their contemporary ZFS source became unencumbered, I doubt OpenZFS would want to try and merge significantly parts. They already have their own encryption implementation for example.

> They took the entire Solaris code back to proprietary source and kept improving ZFS themselves.

And OpenZFS/Linux/FreeBSD kept improving ZFS as well.

> For instance, they added encryption.

As did OpenZFS.